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Economy in Brief

U.S. ADP Private Payrolls Rise with Net Downward Revisions to Previous Months
by Gerald D. Cohen  October 30, 2019

The ADP National Employment Report count of private nonfarm payrolls increased a slightly-greater-than-expected 125,000 in October (1.5% year-on-year) following a downwardly-revised 93,000 gain in September (was 135,000). The August reading was revised up by 2,000, putting net revisions at -40,000. The Action Economics Forecast Survey had anticipated a 120,000 gain. During the last three months, ADP payrolls have grown an average of 126,000 versus 99,000 in the prior three months and a 219,000 monthly average during 2018. During the last ten years there has been a 66% correlation between the change in the ADP figure and the change in nonfarm private-sector payrolls as measured by the Bureau of Labor Statistics. However, using first-reported data the ten year correlation declines to 52%.

Small-sized business hiring increased 17,000 in October (0.7% y/y), medium-sized payrolls grew 64,000 (2.0% y/y) and large firm payrolls were up 44,000 (2.2% y/y).

Private service-sector payrolls increased 138,000 (1.7% y/y) driven by gains in education & health services (41,000; 2.5% y/y), trade, transportation & utilities (32,000; 0.8% y/y), leisure & hospitality (19,000; 2.0% y/y), professional & business services (18,000, 2.1% y/y), and financial activities (17,000; 1.3% y/y). The other service sectors were up by single digits.

Employment in the goods-producing sector fell 13,000 (+0.9% y/y) in October with 4,000 job declines in manufacturing, construction, and natural resource sector payrolls (+0.4%, +2.1%, -3.3% y/y respectively; monthly changes don't add up due to rounding). The GM strike likely weighed on factory payrolls, though they were also down 3,000 in September. Lower oil prices continue to take their toll on the natural resource & mining sector as payrolls have declined for seven consecutive months.

The Automatic Data Processing Research Institute survey is based on ADP's business payroll transaction system covering 411,000 companies and nearly 24 million employees. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

The ADP National Employment Report data can be found in Haver's USECON database. Historical figures date back to 2001 for private employment and the industry breakdown, and 2005 for the business size breakout. The expectation figure is available in Haver's AS1REPNA database.

For more analysis of the track record of ADP, see Understanding the Value of Point in Time and Expectations Data.

ADP/Moody's National Employment Report Oct Sep Aug Oct Y/Y 2018 2017 2016
Nonfarm Private Payroll Employment (m/m chg, 000s) 125 93 159 1.5 2.0 1.7 2.0
 Small Payroll (1-49) 17 21 54 0.7 1.5 1.5 1.9
 Medium Payroll (50-499) 64 34 63 2.0 2.3 1.8 1.5
 Large Payroll (>500) 44 37 42 2.2 2.3 2.1 2.7
Goods-Producing -13 -5 8 0.9 3.1 1.7 0.8
  Construction -4 2 9 2.1 5.0 3.3 4.3
  Manufacturing -4 -3 4 0.4 1.8 0.8 0.1
Service-Producing 138 98 151 1.7 1.7 1.8 2.2
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